Mohsin Khan

Libya is in a Catch-22 situation—political agreement cannot be reached without economic improvement and political stability is necessary to revive the economy. Turning the economy around is contingent on oil production and exports coming back on line, at least in its initial phase. In order to produce and export at full capacity, the country requires peace and security that allows for the resumed functioning of its oil wells and terminals.

Over the past decade or so, Egypt has consistently experienced relatively high rates of inflation. But since the advent of the Arab Spring in 2011, the increase in consumer prices steadily accelerated. During 2011-2015, the average rate of inflation was close to ten percent a year, which was well above the corresponding rate of six to seven percent a year in the MENA region as a whole. Many factors are at play here in causing inflation to rise: increased oil prices worldwide, food price increases, growing fiscal deficit, and rapid increase in the money supply.

On August 11 this year, the Egyptian government, the Central Bank of Egypt (CBE), and an International Monetary Fund (IMF) staff team reached an agreement on a three-year economic program under the IMF’s Extended Fund Facility worth $12 billion. The announcement of the agreement was greeted with considerable fanfare, as it showed Egypt was ready, with the help of the IMF, to undertake serious and necessary reforms to bring the economy out of the woods.

At the outset of the political uprisings that began in North Africa in 2010, the four countries of Algeria, Libya, Morocco, and Tunisia faced similar economic and political challenges. Over the past almost six years, the countries have adopted different approaches to address these problems, however the overall economic picture today is grim amid varied political environments. In “Aftermath of the Arab Spring in North Africa,” authors Mohsin Khan and Karim Mezran examine whether these four North African countries have been successful in meetings the demands of their populations as expressed in the 2010-11 uprisings and what challenges remain for them in the future.

Egyptian and IMF officials are startingnegotiations this week in Cairo to finalize a 3-year program worth $12 billion. These negotiations will last about two weeks, after which the IMF will return to Washington with a “Letter-of-Intent” specifying the policies that the government of Egypt will undertake over the course of the program. If the negotiations are successful and the program is approved by the management and Executive Board of the IMF, Egypt would receive the first tranche of the $12 billion loan by October. The news that a deal is in the making has already led to a jump in the Egyptian stock market and a modest strengthening of the Egyptian pound in the black market.
Read More

The Egyptian economy is “in the doldrums” as a result of political instability and insecurity that have led to inconsistent economic policies and depressed foreign investment, said Mohsin Khan, a nonresident senior fellow at the Atlantic Council’s Rafik Hariri Center for the Middle East.

Khan spoke in a discussion on Egypt’s economic prospects on June 15. He was joined on the panel by Hazem Beblawi, a former prime minister of Egypt who currently serves as an executive director of the International Monetary Fund and Caroline Freund, a senior fellow at the Peterson Institute for International Economics. Mirette F. Mabrouk, deputy director of the Rafik Hariri Center, moderated the discussion.